Coinbase Revenue Beats Analyst Estimations at Over $700 Million

America’s largest digital asset exchange has just released its second quarterly Coinbase earnings report. The company has beaten analyst estimates with earnings boosted by its custody deal with BlackRock despite regulatory pressure.

On Aug. 3, Coinbase reported $663 million in net revenue for the second quarter of 2023, beating analysts’ expectations. 

Coinbase Revenue Over $700M

In its second quarterly shareholder letter, Coinbase reported a positive $194 million Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) despite a $97 million net loss for the exchange.

Total revenue was $708 million, down 8% from last quarter. It stated that net revenue was $663 million, down 10% due to multi-year low crypto volatility. 

Coinbase chief financial officer Alesia Haas said, “Volatility has been a key driver of our transaction revenue,” before adding, “This is the lowest volatility we have seen in many years.”

It revealed that the firm’s balance sheet strengthened to $5.5 billion in USD resources, which increased $156 million quarter-on-quarter. 

Its total revenue was higher than the $631.2 million consensus estimate of analysts surveyed by Bloomberg. However, quarterly transaction revenue fell to $327.1 million.

Bitcoin accounted for 40% of trading volume in the quarter, up from 31% in the same period last year.

Mark Palmer, an analyst at Berenberg Capital Markets, commented: 

“Coinbase’s revenue beat versus consensus estimates was due in large part to better-than-expected interest income and staking revenue, which are two areas of the company’s business that appear to be at risk going forward,”

SEC Battle and COIN Price Reaction

Despite transparency with SEC for years, the firm expressed disappointment over the unwarranted enforcement action. In its earnings call, Coinbase Chief Legal Officer Paul Grewal said the firm is seeking a dismissal of the SEC lawsuit, arguing that it never sold securities.

“With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win,” he said. 

On Aug. 3, trading platform Robinhood released its Q2 earnings report. It revealed a 16% contribution from crypto trading to overall revenue, down 18% from the previous quarter.

Coinbase’s stock price was flat on the day, trading at $89.88 after hours with little reaction to the earnings report. 

COIN has performed well in 2023, gaining 167% since the beginning of the year. Comparatively, crypto markets have made just 45% in the same period.